Much like a traditional mortgage, a reverse mortgage does have fees associated with securing it. The following is a list explaining common fees you may have to pay when getting your reverse mortgage.
Origination Fee – The origination fee covers the lenders operating expenses associated with making the reverse mortgage. This can include things like overhead, marketing and title searches.
With an HEMC reverse mortgage your origination fee is 2% of the first $200,000 plus 1% of any amount over $200,000 - not to exceed $6000. Origination fees can be paid from the proceeds of the reverse mortgage..
Appraisal Fees – Before a reverse mortgage loan can be approved an appraiser will come to your home and inspect it. The appraiser will be looking to determine the worth of your home based mostly on condition, location and the current market situation. The cost of an appraisal is generally around $500.
If the appraiser uncovers a significant problem you will be required to hire a contractor to fix the problem before obtaining your reverse mortgage. That same appraiser will come out again and re-inspect the property.
Mortgage Insurance Premium – The mortgage insurance premium is a fee associated with the HEMC reverse mortgage plan. This fee is equal to 2.5% of the value of your home or the FHA loan limit (whichever is less) if you withdraw 60% or more of your eligible funds in the first year. The fee is .5% if you withdraw less than 60% of your home's value in the first year. Additionally you will pay an annual premium of 1.25% of the loan balance.
The mortgage insurance premium guarantees that you will continue to receive your monthly payments and that you will never owe more that what your home is worth once the loan reaches maturity.
Closing Costs – Closing costs that are generally included in a reverse mortgage are:
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